It’s the economy, number one
This is number one in our new, weekly round up of economics news. Written and compiled by Grieve Chelwa.
Given that we have an economist on board, it would be a crime not to ask him to do weekly post / “column”–called It’s The Economy Stupid where he does a post with listicles of economic news; more like help us make sense of what mattered that week in economic policy, the markets or debates among experts. It was basically his informative Facebook posts about economic politics in his native Zambia, that got my thinking. Grieve Chelwa, of course, is duly qualified. He has a Ph.D in Economics from the University of Cape Town and is currently a postdoctoral fellow at Harvard University’s Center for African Studies. You’ll also remember Grieve for this.—Sean Jacobs
(1) We’ll start where else but in the United States of America where Hillary Clinton, the presumptive presidential candidate of the Democratic Party, is facing questions about paid speeches she gave to the money men and women at Goldman Sachs. So at this Goldman Sachs shindig, Hilary Clinton makes a couple of jokes (watch beginning from the 6:30 mark) about a meeting she had with some “African” economists in the 90s and how she challenged them on the exclusion of women’s work in GDP statistics on the continent. The audience clearly enjoys this segment of the talk and has a series of laughs at the expense of the poor African economists.
Firstly, Madame Clinton should tell us the names of the “African” economists she met with. Inquiring minds want to know. Secondly, the joke’s on this audience because women’s domestic work is hardly reflected in GDP statistics even in the U.S. And by the way, women’s contribution to, for instance, agriculture in most African countries are relatively well captured in agricultural surveys. And agriculture is not an insignificant part of total output on the continent.
(2) Burkina Faso, which has been Africa’s biggest adopter of Genetically Modified (GM) Crops, has announced plans to phase out GM cotton. Adopting GM cotton increased Burkina’s cotton output. But it turns out that the GM cotton delivered a far inferior cotton quality resulting in “severe economic losses for Burkinabe cotton companies”. This development will definitely impact the GM adoption debate on the continent going forward. (Some additional reading is here).
(3) The 2016 Winter Edition of the Journal of Economic Perspectives has an entire symposium on the “Bretton Woods Institutions” (World Bank, IMF and World Trade Organization). Some of the essays, particularly this one by Martin Ravallion, are somewhat critical of the World Bank. Unfortunately, none of the essays feature writers from the “South”, particularly in light of the long history of interaction between these institutions and the countries of the South. Alas. (By the way, all the essays are free to read without the need for a subscription).
(4) New OECD tax agreement improves tax transparency – but the U.S doesn’t sign and the U.S press won’t tell you.
(5) Related to item number 4, the U.S. is emerging as the world’s favorite new tax haven: “Everyone from London lawyers to Swiss trust companies is getting in on the act, helping the world’s rich move accounts from places like the Bahamas and the British Virgin Islands to Nevada, Wyoming, and South Dakota”. Remember that story about Teodoro Obiang’s mansion in Malibu, California?
(6) So Barack Obama has signed into law the Electricity Act of 2015 which provides legal backing for his “Power Africa Initiative”. The initiative was announced during Obama’s tour of Africa in 2013 and aims to bring electricity to 50 million people on the continent by 2020. The U.S government has made financial “commitments” of $7bn towards the initiative plus $43bn in pledges from “partners”. Any investment into Africa’s power sector should certainly be welcomed but calling the initiative “Power Africa” might be a bit of a stretch. For one thing, the International Energy Agency reckons the continent needs to invest about $55bn per annum until 2040 to meaningfully power the continent.
(7) We are not surprised that the global aid industry transforms “unremarkable young people [from the West] into a little aristocracy [in much of Africa]”.
(8) The economic “burden” of hosting refugees for Western European countries is tiny. It would even be smaller if they were allowed to work. Hmmm, we wonder what explains all the refugee bashing, then?
(9) Nigeria is facing a widening fiscal deficit (which is the difference between government expenditure and government revenue) mainly as a result of dwindling revenues from oil exports. News broke a couple of weeks ago that Africa’s biggest economy was in talks with the World Bank and the African Development Bank for $3.5bn in emergency loans. The news was swiftly dismissed by the Minister of Finance who said the country had merely held “exploratory” talks with the World Bank. Nigeria’s story is now typical as the continent struggles with debt issues after borrowing heavily over the last decade when commodity prices were high and mighty (see Chad’s, Ghana’s and Zambia’s stories).
(10) The rate of inflation in Zambia (which is the rate at which prices are increasing) more than doubled to 21% in January 2016 from 7% in January 2015. The Kwacha’s underperformance in 2015 largely explains much of the rise in prices over the two time periods. Rising prices might turn out to be a significant factor in the presidential elections slated for August this year.
(11) January was the 101st birthday anniversary of Professor W. Arthur Lewis. Professor Lewis is the first and only black person to win the Nobel Memorial Prize in Economics. He also served as economic advisor to Kwame Nkrumah and some of his thinking around development economics was influenced by his time in Ghana.
(12) Finally, Julius Sello Malema, firebrand leader of South African opposition party, the Economic Freedom Fighters, had lunch with the Financial Times last week. The ending is gold.